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Total noob question: Is this amount and scope of hit&miss/disagreement normal with TA, or is it due to bitcoins diverse nature or perhaps its maturity?
I'll chime in on this one, if you don't mind...
There seems to be more disagreement than usual between competent traders / analysts at the moment, but I think it's mainly because the market itself is at a 'decision point', so - anthropomorphizing the market a bit - it is in the "process of making up its mind", and therefore, more difficult to predict as well.
If you look back instead to, say, November last year, there was pretty wide agreement where we were heading.
That said, some disagreement always remains. However, I'd like to point out, it is only "hit & miss" if you look at it from the perspective of creating a complete descriptive model, e.g. what a model in an empirical field aims for, say, meteorology or weather forecasting.
However, market predictions applied to trading are crucially different, in the following ways:
- In weather forecasting, you are expected to make a prediction *every day*, and be right every day. In trading on the other hand, you don't *have* to trade when you're not sure - otherwise, you will sit in a "neutral" position, i.e. the least volatile one. The general goal is to enter a position at a point at which your (subjective) probabilities suggest a certain direction of the market, and then exit it at a profit, either at a fixed profit target, or when your subj. probabilities say the direction changes.
- As a corollary of the above: the better you are at both predicting the market direction *and* judging the accuracy of your predictions, the more profitable your trading will likely by. So, in terms of subjective probabilities, you are looking for a
Calibrated probability assessment.
- Last, and maybe most importantly: profits and losses can be kept asymmetric with sufficient trading discipline. Enter: target based trading, and stop losses. It's an old trading mantra: you can be wrong 9 out of 10 times, as long as you manage to strictly limit the losses in the cases where you're wrong, and you profit sufficiently the one time you are right.
That was a bit long maybe. So here's the
tl;dr: Most non-traders don't realize that trading is only one half "direction prediction". The other half is risk management. And some traders would even argue, in terms of importance, risk management comes
before predictions accuracy.
